What Owners Need to Know

FREQUENTLY ASKED QUESTIONS

As an owner of a property managed by Steinborn Inc. Realtors, there may be a number of questions that will come to mind during the time we are managing your property. In an effort to assist you in understanding the process and issues which may come up during our tenure in managing your property, we have identified a number of common questions that have been brought up from time to time by owners.

We hope that this will be of assistance to you. For further information, please contact us at 575-532-2288.

I worked with one of your staff, and then another one will call or email me with an issue. Who should I be dealing with?

The staff works as a team. To try and respond as quickly as possible, one of our staff may call you on one issue and another one may be dealing with a different issue. This is to facilitate the quickest possible response. The three staff in property management share an office and continually communicate, so on most issues each of them should have some knowledge of your property and any issue that is being dealt with.

Why is it when I call, sometimes I do not get a call back right away, or someone is not always available to take the call?

The staff handles a number of properties. For each property, we have an owner, a current tenant (possibly a past tenant or a potential tenant, depending on the current status of the property) and depending on what may be going on with any give property, one or more contractors. Staff tries to take all calls when they come in, but if they are out in the field or on another line, that is not always possible. For that reason, we try and use email as much as possible, since it waits for you to respond as soon as you can, and it also gives you a written record of discussions between you and the staff.

I would like to discuss several issues with the tenant rather than go through your staff. Is that acceptable?

Unfortunately, no it is not an appropriate practice. There are a variety of legal issues in dealing with a tenant based on State and Federal law. We have significant concerns on any liability for you or us that may arise from these discussions.

Why does Steinborn retain the late fee if the tenant is late on the rent?

The staff spends a significant amount of time trying to get in contact with the tenants who have not paid, and once in contact, trying to work out payment to get the rent money owed the owner. In addition to personal contact (in the office and telephone) staff also has to prepare legal documents including “3 Day Notices” and “Writs of Restitution” (for court action leading to possible eviction). These activities are above and beyond the typical management activities; the late fees cover some of these costs.

When the tenant is late, you charge him a late fee but the late fee appears to come out of my funds?

The late fee is taken out of any money received from the tenant before we credit payments towards rent. The reason for this is that we can only evict a tenant for non payment of rent. Some Magistrate Court judges do not consider the late fee as a part of the actual rent and so will not evict for non payment of the late fee.

Why does Steinborn require that the owner pay for an inspection of the furnace in the fall? I have refrigerated air conditioning and the change is by a switch on the thermostat?

The reason for having a licensed plumber go out on an annual basis and check the furnace (and air-conditioner) is primarily safety. When the plumber is out there, they check for natural gas leaks and carbon monoxide leaks. Either type of leak could cause significant harm to the tenants and a natural gas leak could have devastating consequences for the property. We also believe that this provides a preventative maintenance component to help you as the owner reduce the probability of a more expensive repair to the HVAC system.

Can I as the owner be the one to make the decision on what repairs to make?

The answer to this question is that it depends. Generally, Steinborn makes an effort to contact you (preferably by email) when the tenant calls in with a problem. If it is a major repair, we will always provide you with at least one and possibly two or three estimates for the work. It is a minor repair, we will usually let you know and proceed to have the work done. There is a requirement in New Mexico law that the tenants be able to have what is termed “quiet enjoyment” of a property they are renting and that has been determined to include having all items in good working order. It is our responsibility to ensure that this is done so as to minimize liability to you as the owner and us as the property manager.

It seems that there are always repairs. Are the tenants damaging the property?

On a house, depending on the age, condition and a variety of other factors, there are often times items that need to be fixed. Sometimes things break or just wear out. If we can have some reasonable level of proof that the issue occurred from negligence by the tenant, we will charge any repair back to them. Otherwise, it is your responsibility as the owner of the property to pay for these repair costs. The repair people we use are always watching for this and will report back to us if they believe that the tenant caused the damage. This is critical since they would be the disinterested third party who would testify in court if necessary to recover costs from the tenant if there was a disagreement on the cause of any damage. It also needs to be clear that State law establishes a tenant is not responsible for items that would be considered “normal wear and tear” during the course of their occupancy.

Aren’t you then spending my money without my permission?

No. As a part of the property management agreement, you have given us authorization to undertake repairs of limited scope and cost. This authorization enables us to protect the integrity of the property and ensure compliance with provisions of the lease and State law. We do not receive any financial benefit from having an item fixed, since you pay directly for what the vendor bills for those services. There is no overhead charge from Steinborn.

What happens if there is a major repair issue, and you cannot contact me?

On occasion, there can be type of repairs that may need to be made that will be expensive. We must make these repairs in a reasonably timely manner as required by New Mexico law and the lease with the tenant. We will make all reasonable attempts to contact you to advise you of the issue, but if we cannot contact you within a reasonable time frame (the exact time frame will depend on the type of problem), we will authorize that repair to be made.

Why do I have to pay for a cleaning of the property?

When an existing tenant moves out, we charge their deposit for any cleaning which may be required (both inside and in the yard). However, if the property does not rent right away, sometimes it may be necessary to do a light cleaning just prior to the new tenant moving in. In that case, the owner has the cost for that cleaning. If your property is a new property we have just started managing, if it is not clean to the standards we are looking for, we will have someone go in and clean it before a tenant moves in. Our reason for doing this is that we have very high expectations of what the property should look like when a tenant moves out, and we do not want the tenant to have any ability to question us using part (or potentially all) of the deposit for cleaning.

What if I want to use my own person to do repairs?

We will consider, on a case by case basis, using a different person/company for repairs on your property. What we require of any contractor we use is that they provide us with a W-9 to ensure that we are in compliance with IRS regulations and that they have $1,000,000.00 in liability insurance. This covers us and you (as well as your property) in case there is a problem with the work done. Related to this, New Mexico has licensing laws that require only licensed contractors do certain kinds of work. If you use a person to do work on your property and they do not have the applicable contractor’s license, you may be in violation of New Mexico law. Additionally, if an unlicensed individual or company does work on your property and there is a problem, your insurance company may not cover any claim should one arise from that work. You must use a contractor for any repairs who has the applicable license to undertake that type of work. Any repair work that is done by your contractor must be paid for directly by you. We also MUST have the name and phone number of the contractor so that we may contact them directly. We will not go through you as a third party in the transaction to schedule repairs. Additionally, if they fail to perform in a timely manner or otherwise non responsive, we do reserve the right to utilize one of our selected contractors to undertake the work.

Why do the utilities have to be on when there is no tenant in the property?

We require that the utilities be transferred into your name, when the property is vacant. The bills are still sent to us to pay from your funds. That accomplishes several items. It permits us to have the property cleaned after a tenant moves out and/or before a new tenant moves in. Additionally, it facilitates a tenant moving in since the property is the now “move in ready”; the tenant has utilities on and has four days to get them switched into their name. If they do not, we will bill the cost of utilities back to the tenant.

I have a septic tank for wastewater for my property. Who is responsible for the maintenance and costs related to the septic tank?

As the property owner, you are responsible for all coats associated with a septic tank (excluding any action that is obviously tenant negligence).

The gas service for my property is propane. Who is responsible for the cost?

You are responsible for tank rental, if it is rented from one of the propane companies. You are also responsible for the cost to have the tank completely filled before the tenant moves in. When the tenant moves out, they are responsible for having the tank completely filled.

If a tenant does not pay rent, how does Steinborn handle this?

The primary goal on ensuring that tenants pay rent is to be able to provide you as the owner the revenue/return on your investment that you expect. If a Tenant is late on rent, staff will call that tenant to find out what is going on. This usually occurs within a 2 to 3 day time period after the 5th of the month (rent paid after the 5th is considered late). If the tenant indicates they are having a problem, but are planning to pay, we will work with them to set a specific time that we can expect their rent payment. Typically between the 3rd to 6th day after rent is due, we will prepare a 3 day notice. We have the 3 day notice delivered to the tenant by an independent process server and the tenant is charged for this $10.00 fee. If the tenant does not pay within the three days, or make arrangements to pay, then Steinborn will generally proceed to file with Magistrate Court for eviction.

So if you are successful in evicting a tenant for not paying rent, how do we collect the money the tenant owes?

If we prevail in Magistrate Court, the Court will issue a judgment against that tenant. That is the money they owe and the Court is ordering them to pay. However, we are not able to force payment through garnishment or other legal means. We are not set up as a collection agency, and have no background or familiarity with the federal and state laws which relate to debts and collections. We do have an informal arrangement with one of the local collection agencies, and with your written direction, will turn the files over to them.

If you turn the information over to a collection agency, what happens then?

The collection agency will follow up pursuant to their normal procedures. If they collect any money, there will be a fee; typically they charge 40% of anything they collect. The remaining 60% would be your funds. If they do not collect anything, you would not owe any charges to them. Steinborn does not receive any of the funds that they may collect.

As the owner, can I have input into who you rent the property to?

No. You have hired us to manage the property, and although we welcome and respect your input, there are very specific state and federal laws which relate to discrimination. We have reasonably stringent requirements on the qualification of tenants; however, these relate specifically to ability to pay the rent (income), credit history and past rental history. We DO NOT look at other factors related to the tenants.

We have a tenant (potential or actual) who has a disability and wants to make structural changes to the property to deal with that disability. Do I have to let them do that?

Yes. Under the Americans with Disability Act, if a tenant wants to make a change to the property related to their disability, we must permit them to do that. The basic limitations are that it is at their own expense, and we can require that the property put back to the original condition after they move out, also at their expense.

On my statement, it sometimes shows an “Amount Due.” Is that something I have to pay?

Generally, no. The property management software we use for accounting/financial management shows this whenever the balance in your Owner’s Account drops below the minimum reserve set in your management agreement. This may be the result of paying a bill after the rent proceeds have been sent to you, and we are at the minimum balance. If there is a reason we need to have you send funds, we will contact you directly and give you a specific explanation of what is needed, why and an approximate amount.

What if I want to sell the property?

You as the owner always have that right to make a decision to market the property for sale at any time. However, we recommend against it for a couple reasons. First, it is difficult for a Realtor to show property with a tenant in it since they must be given at least 24 hours notice and it generally has to be at the tenants’ convenience. Second, the tenant has no particular obligation to make it look in showable condition, so it obviously will not be as neat as if it was vacant or if you were living in the property. Third, most buyers are looking to move into the property after closing. Although not absolute, generally, the tenants lease is binding and they cannot be forced to move out prior to the end of the lease, so most buyer/occupants will shy away from a leased property. If you do decide to sell the property, we require that you agree to let the tenant out of the lease. We also want to have the tenant moved out of the property so that prior to actually listing it, so that the property has been cleaned and is in a condition that facilitates showing the property. Additionally, if someone goes into the property without providing the required notice under state law, the tenant has the potential for successfully claiming damages in court.

What if my property goes into foreclosure?

If you are unable to pay your mortgage and the mortgage company files for foreclosure in District Court, we will permit the tenant to terminate the lease with no penalty. They will still have responsibility for leaving the property clean and in good repair, and we will retain the amount of the deposit required to repair any tenant damage or clean the property.

How is the management fee calculated?

The management fee is a percent of the total rent collected every month that the property is occupied by a tenant. If there is additional rent for a pet (“pet rent”) that is included in the gross rent and is subject to the management fee.

Can you charge a deposit of more than one (1) month’s rent?

We will not manage a property where the deposit is more than one (1) month’s rent, no matter what the purpose of the deposit is or what it is called. There are specific provisions of New Mexico law that govern deposits, including a requirement for paying interest on the deposit; we have made a decision to limit deposits to an amount equal to one month’s rent for simplicity and liability reasons.

We have seen the house (interior and/or exterior) of our house and are not satisfied with the way the tenants are maintaining it. We want you to evict the tenants.

This is an extremely problematic issue to address. The Owner-Resident Relations Act governs the expectations, requirements and obligations of both tenants and landlords (property owners). Generally, the tenant has the right to live in the property with minimal interference from the landlord. Although there are specific issues that can be used as grounds to terminate a lease and evict a tenant, they must be substantive. The mere fact that a tenant does not spend the time cleaning the house or yard that you as the owner may, is not grounds for terminating a lease. In any case, on non rent payment related issues, the Magistrate Judge has wide discretion in interpreting the statute and determining what is reasonable. We will not attempt to terminate a lease without reasonable certainty of prevailing due to the potential negative financial consequences to us as the management company and you as the owner.

How soon can I get possession of my property after the tenants move out?

While we try and turn the property around as quickly as possible, we cannot guarantee an immediate possession after the tenants move out. By statute we must have the tenants final charges established and send them a final statement no later than 30 days after they move out or the end of the lease, whichever is later. We will have the property ready for you not later than 30 days after the tenants move out. If you want an earlier possession, we can arrange for that, however, depending on how quickly you want possession, you may be required to accept the property as is, and waive any charges to the tenant for cleaning or repairs.

I don’t want you to do any cleaning or repairs; I want to do them myself and have you turn the tenants deposit over to me.

Unfortunately, we do not believe we can do that under New Mexico law. The Owner-Resident Relations Act is quite clear that we need to provide an itemized statement to the tenant, which identifies all charges against the tenant’s deposit. If you do the work yourself, there is the open ended question as to whether or not that is a legitimate charge. We are not able to defend that issue, should the tenant challenge it in Magistrate Court. When we have an outside contractor do the work, they can testify to the scope of their work and the appropriateness of the bill.

I use the rent to pay my mortgage. How can I be certain that rent will be sent to me before my mortgage is due?

Unfortunately, there is no way to guarantee the timing of funds from rent being provided to you on a specific date. When the tenants pay on time, the soonest we can guarantee that we will have funds to you by electronic transfer by the 21st of the month. If you are receiving funds by check, the check will be mailed no later than the 25th. However, if the tenant pays late, we cannot be certain when you will receive the funds. We usually have a 2 to 5 day turnaround when the tenant pays late, but that is dependent on the tenant paying the rent. If the tenant pays with a personal check, the soonest you would be able to receive funds is the 21st of the month or 14 days after the tenant pays, whichever is later.

How often do you check on the property?

Anytime we are in the neighborhood, we try and do a drive by of the property. This can be as often as once a week, or as seldom as once a month, depending on the location of the property.

Do you do scheduled walk throughs?

It depends. If we have reason to suspect there is a problem, then we will do a walk through. However, generally we do not do walk throughs since there are specific limitations on access to a property with a tenant renting it. There is not an absolute right to get into the property at anytime and we try to be judicious about entry into an occupied property as the State law does establish penalties for violations on entry. Additionally, the repair people we use check up on any property and report back to us if they see any problems when they are at the property.